Slide 1: KONE Q2 2017
KONE Q2 2017 JULY 19, 2017 HENRIK EHRNROOTH, PRESIDENT & CEO ILKKA HARA, CFO
Slide 2: Q2 2017 highlights
Q2 2017 highlights Good overall execution Profitability burdened by several headwinds Stabilization in China Good improvement in customer loyalty in all businesses
Slide 3: Q2 2017 key figures
Q2 2017 key figures POSITIVE SALES AND ORDERS DEVELOPMENT Historical Comparable 4-6/2017 4-6/2016 change change Orders received MEUR 2,056.2 2,067.8 -0.6% 1.1% Order book MEUR 8,905.1 8,763.6 1.6% 4.9% Sales MEUR 2,284.4 2,272.6 0.5% 1.7% Operating income (EBIT) MEUR 326.4 348.6 -6.4% Operating inco
Slide 4: January-June 2017 key figures
January-June 2017 key figures CONTINUED SALES GROWTH IN A MIXED OPERATING ENVIRONMENT Historical Comparable 1-6/2017 1-6/2016 change change Orders received MEUR 3,969.2 4,010.1 -1.0% 0.0% Order book MEUR 8,905.1 8,763.6 1.6% 4.9% Sales MEUR 4,094.7 4,020.9 1.8% 2.4% Operating income (EBIT) MEUR 544.
Slide 5: 1-6/2017 sales split
1-6/2017 sales split SHARE OF SERVICES AND THE AMERICAS OUT OF TOTAL SALES CONTINUE TO GROW BY BUSINESS BY AREA 13% (13%) 20% (18%) 41% (44%) 52% (53%) 35% (34%) 40% (39%) New equipment Maintenance Modernization Asia-Pacific EMEA (Europe, Middle East and Africa) Americas 1–6/2016 figures in brackets
Slide 6: Q2 business overview
Q2 business overview POSITIVES Continued sales growth and solid orders received development in many markets Stabilization in the new equipment business in China Good improvement in customer loyalty in all businesses Good progress in execution of our new strategy HEADWINDS Profitability
Slide 7: The implementation of our new strategy continues with good momentum
The implementation of our new strategy continues with good momentum Roll-out of the new KONE Care™ as well as 24/7 Connected Services continued; available in over 10 countries this year Renewed KONE Online platform for maintenance customers launched in a number of countries with very positive custom
Slide 8: Market development
Market development
Slide 9: New equipment market development in Q2
New equipment market development in Q2 GLOBAL MARKET VOLUMES DECLINED SLIGHTLY EMEA market North American market Asia-Pacific market Q2 development (in units) + + - Share of global ~20% <5% >2/3 market (in units) Slight growth in South Europe Continued growth in the United Market in China decl
Slide 10: Chinese property market
Chinese property market GOOD DEMAND HAS RESULTED IN IMPROVING INVENTORY LEVELS Inventories Housing sales and prices E&E market Inventories low in higher-tier cities; Authorities introduced further restriction Real estate investment relatively stable situation continued to improve in lower- mea
Slide 11: Service market development in Q2
Service market development in Q2 GROWTH CONTINUED ACROSS REGIONS EMEA market North American market Asia-Pacific market Maintenance Q2 development + + +++ Share of global >40% <10% ~40% market (in units) Pricing environment remained Positive development except for Continued good growth across t
Slide 12: Q2 financials
Q2 financials
Slide 13: Orders received
Orders received CLEAR GROWTH IN EMEA AND THE AMERICAS The relative margin of orders received declined slightly but MEUR remained at a good level 2,500 -0.6% -1.5% 1.1% 2,056 2,000 1,913 2,068 34 1,500 2,056 + Continued growth in EMEA and 1,000 Americas - Orders declined in 500 Asia-Pacific 0 2010
Slide 14: Sales
Sales SALES GROWTH DRIVEN BY MAINTENANCE At comparable exchange rates: +1.7% MEUR 3,000 +1.9% +0.5% +5.2% 2,500 +3.5% 2,284 -0.2% 27 2,284 2,000 1,810 2,273 1,500 EMEA: +5.0% 1,000 Americas: +3.7% Asia-Pacific: -1.8% 500 0 2010 2017 New equipment Maintenance Modernization Q1 Q2 Q3 Q4 Q2 FX Q2
Slide 15: Operating income
Operating income MARGIN DECLINED TO 14.3% DUE TO SEVERAL HEADWINDS MEUR 500 349 -6.4% 326 -1.7% 250 6 326 218 + Services growth, productivity improvements - Raw materials, margin pressure in China - R&D and IT 0 2010 Q1 2017 Q2 Q3 Q4 Q2 2016 Growth Profitability FX Q2 2017 At historical exchange rat
Slide 16: Market and business outlook for 2017
Market and business outlook for 2017
Slide 17: Market outlook for 2017
Market outlook for 2017 NEW EQUIPMENT MARKETS – Asia-Pacific: The market in China is expected to decline by 0–5% in units ordered, intense competition to continue. In the rest of Asia-Pacific, the market is expected to grow slightly. – Europe, Middle East and Africa: the market is expected to grow
Slide 18: Business outlook for 2017 (specified)
Business outlook for 2017 (specified) SALES – KONE’s net sales is estimated to grow by 1–3% at comparable exchange rates as compared to 2016 (previously 0–3%). OPERATING INCOME – The operating income (EBIT) is expected to be in the range of EUR 1,200-1,280 million, assuming that translation exch
Slide 19: Q2 summary
Q2 summary Stabilization in China Firm actions to offset the impact of several headwinds Positive development in customer loyalty Good traction with our recently launched service offering 19 July 19, 2017
Slide 20: KONE's Capital Markets Day
KONE’s Capital Markets Day SEPTEMBER 29, 2017 IN LONDON
Slide 21: Dedicated to People Flow
Dedicated to People Flow" KOIN|E
Slide 22: Appendix
APPENDIX 22 July 19, 2017
Slide 23: KONE in China
KONE in China NEW EQUIPMENT MARKET CHINA’S SHARE OF KONE’S ORDERS AND SALES New equipment orders received in units vs. market development In monetary value 50 KONE 45 ~35% <30% Market >35% >30% 40 >35% 35 30 The China market declined 25 slightly in units. <20% The China market was 20 stable in units
Slide 24: Currencies
Currencies SALES BY CURRENCY 1–12/2016 CURRENCY IMPACT MAIN CURRENCIES USD (MEUR) Q2/2017 H1/2017 H1/2017 2016 Jul 17, 2017 average average spot Others Sales -27 -23 EUR / RMB 7.4685 7.3199 7.7591 EUR / USD 1.0878 1.1021 1.1462 EBIT -6 -7 RMB EUR / GBP 0.8605 0.8159 0.8776 Orders -34 -41 received EU
Slide 25: Q2 2017 Balance sheet – assets employed
Q2 2017 Balance sheet – assets employed MEUR Jun 30, 2017 June 30, 2016 Dec 31, 2016 Assets employed Goodwill 1,333.2 1,305.4 1,371.8 Other intangible assets 276.8 271.2 292.9 Tangible assets 365.8 357.6 368.3 Investments 125.8 139.9 129.9 Net working capital -1,015.1 -1,033.4 -1,054.8 Assets employ
Slide 26: Q2 2017 Net working capital
Q2 2017 Net working capital MEUR Jun 30, 2017 Jun 30, 2016 Dec 31, 2016 Net working capital Inventories 1,511.2 1,457.1 1,373.5 Advance payments received -2,098.6 -2,055.3 -1,976.9 Accounts receivable 1,557.9 1,512.4 1,573.7 Other non-interest-bearing assets 484.1 532.8 429.8 Other non-interest-bear
Slide 27: Q2 2017 Consolidated cash flow
Q2 2017 Consolidated cash flow MEUR 4-6/2017 4-6/2016 1-6/2017 1-6/2016 1-12/2016 Operating income 326.4 348.6 544.1 570.0 1,293.3 Change in working capital before financing items and taxes -34.2 18.9 25.1 77.7 109.7 Depreciation and amortization 28.2 25.8 56.6 51.3 106.5 Cash flow from operations b